Corporate Governance and Non-Performing Loans in Nigerian Microfinance Institutions: Evidence from Kogi State

This study investigates the effect of corporate governance on non-performing loan levels in microfinance institutions operating in Kogi State, North Central Nigeria. Microfinance institutions serve a vital financial inclusion role in Kogi State, where commercial banking penetration is limited and agricultural and petty trade financing needs are significant. Elevated non-performing loan ratios, however, threaten the sustainability of many microfinance banks, and poor governance structures have been identified as contributing factors. Drawing on agency theory and microfinance governance literature, this study examines how governance mechanisms including board composition, credit committee oversight, management accountability structures, and loan monitoring practices relate to non-performing loan outcomes. A quantitative design is adopted using secondary data from annual returns filed with the Central Bank of Nigeria by eighteen microfinance banks in Kogi State over a four-year period. Panel regression analysis controls for loan portfolio size, interest rate levels, and economic cycle indicators. The study anticipates that stronger board oversight and active credit committee governance are significant negative predictors of non-performing loan ratios. Findings will assist CBN supervisors, microfinance bank boards, and development finance partners in designing governance interventions that promote sector financial health. Keywords: corporate governance, non-performing loans, microfinance institutions, Kogi State, board oversight.